tv Power Lunch CNBC December 31, 2012 1:00pm-2:00pm EST
i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still going to give me a heart attack. we're more than 78,000 people looking out for more than 70 million americans. that's health in numbers. unitedhealthcare. dr. j, what do you do here? stock market moving based on amman jafers reporting. >> i believe you sell into the pop. >> weiss? >> i agree. if there is no deal, you sell it. >> thank you. have a great evening. "power lunch" picks up the ball right now.
>> we do and 11 hours before the ball drops in times square. floor traders pouring on the confetti in the floor there. annual tradition at cme pch noon time on the corner of southwest jackson an south la salle. we don't know what to say about this, still apparently, no deal with less than 11 hours to go. the music says it best perhaps. washington has been an absolute circus. now in the center ring in 30 minutes, president obama is set to deliver his remarks, we will have them of course live for you here now on "power lunch." let's look at the countdown clock. if we don't get a deal before time slip slides away, spending cuts and tax hikes are indeed the order of the day on this new year. happy new year, america. i'm sue herrera. we will start with john har wood at the white house in a few
minutes. but amman starts us out. >> it seems they are really hashing out details of what to do about the sequester, those are the massive spending cuts. how long you delay those down and otherwise pay for them seems to be the crux of the negotiation going on behind closed doors right now but it is very difficult to find out exactly where these negotiations stand because all sides are being very, very mum. we can tell you that democrats appear to be getting a little bit concerned about where this is headed. take a listen to senator tom harkin who took to the senate floor earlier today. >> the deal must be one that really does favor the middle class, the real middle class, those making 30, 50, 60, $70,000 a year. that's the real middle class in america. and as i see this thing developing, quite frankly, as i've said before, no deal is better than a bad deal and this
looks like a very bad deal the way this is shaping up. >> 10 he knows more about the way this is shaping up than we do of course from the outside looking in. but we've also been told that president is going to speak at 1:30 over the at white house. all eyes will shift down the other end of pennsylvania avenue it hear what the president has to say at that time. up here meanwhile on the house of representatives and house side of the capitol, they are saying they are waiting for action from their senate colleagues. so the senate and white house are leading this charge at this point. sue? >> yes, we spiked to 13,000 on the dow as we got news that obama will speak under now 28 minutes time. let's bring under john har wood. what else are you able to tell us? the stock market disappointed to learn this may be an attempt to make a political point rather than a broader announcement. >> yeah, i think the stock market was misinformed if it thought that the president was going to come out and announce a deal. still could happen because they could settle in the next few minutes. but so far we don't have a deal
yet where we are looking at the contours of an agreement between vice president biden and senate minority leader mitch mcconnell is increase to 39.6 for income somewhere between 400 and $500,000 and probably 450,000. the estate tax would go up slightly from the level of 35% and current law scheduled to go up to 35 and would probably go up slightly to 40%. you are looking at one year extension of unemployment benefits pen you a honk do they defer across the board automatic budget cuts called sequester. as amman referred to, dekrats want at least one year for that to be turned off. initially asking for two years. republicans say, no, we will come up with cuts to offset that for 60 to 90 days. that's where things are going. the problem is you can't consider any one part of the
agreement done until they are all done because there's an inner play on cap gains and dividends by the way, looking at going from 15% on both which is current policy to 20% on both. not the higher rate called for undercurrent law of 39.6% for dividends. 20% for both. this is something that both sides are going to have to consider. see if they can regard it as acceptable it their members. once we get a conclusion to those talks, everything nailed down, then well find out whether this is bipartisan support in the senate and whether that induces speaker bainer to put a bill on the floor, even if a majority of his numbers don't support it, sue. >> john harwood, thank you very much. and john outlined it perfectly because if there is a deal in the senate along the lines of what john just outlined within will it be able to pass the house? representative marlin stutsman is republican from indian and sits on the budget committee. welcome to "power lunch" sir, good to have you here. >> thank you, sue.
good afternoon. >> in the details are in this package, will that package make it through the house? >> we will have to wait and see what senate does send back to the house. the house passed its first tax dill back in august. sent it to the senate. and of course we dealt with the sequester of last week and spread those cuts across the board to other facets of government as well. not just military and medicare. we really have to wait and see. pressure is on the senate to come up with a product, to take it to the floor, to sell it it to its members where the senate would be comfortable passing something and we really haven't seen anything publicly where the senate might be at. so this is a frustrating for a lot of folks across the country and of course for members here in washington. because we're even kind of away from all of the negotiating and seeing what the senate is even talking about. >> what are you hearing from
constituents today? we can see from the stock market's reaction when they thought there was a deal that might be announced at 1:30 when the president makes his remarks, which we will see here on power lunch, we add huge spike in the dow jones industrial average. now that things are cooling off, the mark set giving back a lot of that. so wall street wants a deal. what are your constituents telling you? >> my constituents are concerned about the $16 billion of debt the country is carrying. concerned about trillion dollar deficits that federal government carried over the past four years in its federal budget and they see that something has to change with our spending habits. that's the big concern with constituents in my district that we have to deal with spending first, before we should be talking about tax increases. we can talk about taxes. the president continues to talk about taxes first but we haven't dealt with the real problem and that's the drivers of our debt in our spending. >> all right. thank you, sir. pleasure to have you with us,
congressman. >> all right. >> as we mentioned, dow jones was up about 80 points with shofrt while ago when they thought at 1:30, the president was going to announce a deal right now we are only up about 28 points on the dow. 6.5 on s&p and nasdaq is up 25. now to the other side. representative adam shif shif democrat. welcome to "power lunch." >> thank you. good to be with us. >> outlines of news from different news wires and if indeed the details are correct, would you support the measure? >> i want to look the at full package also. i think would be threading a fine needle in the house of representatives. with that package, would you lose a great deal of republicans and a significant number of democrats too. all of us will not torn between a position where we don't like many things in the package on
the one land an own the other hand we don't like the idea of us going over the cliff and that adversely impacting the whole country. so i think senator reid was quite right when he said early on there are things we don't like and things we like even less. as the package starts to emerge, it certainly appears that way. >> give plet odds of our getting a deal by midnight tonight. >> i still think, and i've been an optimist through this whole thing, all evidence to the contrary, i still think we will have a deal. it appears we are very close. certainly can fall apart at any time and it is yet to fully come together. i do think the consequences of going over the cliff are so significant that we really need to find a way to act and you were asking my colleague about the reaction back home, i can tell you that the reaction from my constituent is that they look at congress and they think it is like a bunch of school kids that can't get to agreement. everyone wants it take the ball and go home. >> right. >> we have an obligation it get this done. i still believe we will get it done but we have yet some distance to go.
>> what's also worrisome to wall street and constituent, if you can't come together and form a deal to get us over the fiscal cliff, then the next debate is the debt ceiling debate. how. >> it is very contentious. the president is right, we shouldn't play that game. up until last year we never did play that game. that is essentially butting a g put /* putting a gun to the head of the economy. we can't hold the nation hostage every time we go through this. i think we do need a longer term deal that agreeses the structural problems. >> congressman, we will let you get back to work.
>> sue, tense times for many. down here on floor of the nyse, taking a break to remember some of the traditions here on the floor on new year's eve. let's get over it mary thompson. >> hey, simon, before we do, a quick market update. popping an retreating after the announcement of the statement president obama will make at 1:30. can you vietnam action in the dow industrials. caterpillar and ge suggesting return. the indication moving to session lows today. these are the groups where the enclave right now. now, i will turn it over to jim and the rest of the traders here on the floor of the new york stock exchange for time honored tradition since the depression, and the singing of wait until the sun shines again. mr. mcguire? ♪ wait until the sun shines, as
clouds go drifting by ♪ ♪ we will be happy, nelly, don't you cry ♪ ♪ ♪ sweetheart you and i ♪ wait until the sun shines, nelly, 12340e ♪ >> with breaking news from washington, john harwood. john? >> i just add conversation with an aide who confirmed there is a deal on the middle class tax cuts pks and it appears they agreed on threshold of $450,000 for families, $400,000 for individuals.
that's a narrower gap at that income level tp. it is designed to catch more individuals with $400,000 incomes to catch a greater proportion of those making higher incomes. under the higher 39.6 rate. the gop aide says he expects president obama to affirm that publicly at 1:30 on additional portions. we are looking, the aide confirmed, at likely 40% rate on the estate tax retaining the $5 million threshold for taxing estates. 20% rate above the thresholds but 15% rate would likely stay the same for individuals below the threshold for the top rate. that's the latest we have heard and we will see if president obama in fact affirms that agreement at this meeting this afternoon in just a few minutes. >> the stock market beginning to move up. as we get clearly some progress. john, for the moment in washington, thank you. let's check in with chicago and rick in the pits. rick? >> thanks, simon.
>> of course the ten-year note yield followed and was totally shadow boxing with the stock market all day and that makes sense. you can see the basis points at 1.75. down from where it was last year on this day. if you look at them both together within ten-year with along with the dow jones, can you clearly see the correlation there. stories are in effect for 2012. dollar index surprisingly is getting close to unchanged on the years. can you see. we close last year around 8017 but there is one market nowhere near where it was last year, the dollar yen. last year under 77. now it is 86 2/3. which means the dollar is up 13% against the yen in one year and a special wish for former first lady barbara bush, and george walker bush, a very happy new
year and to all our viewers. >> rick, well said, thank you very much. >> rick santelli there in chicago. in 16 minutes time the president will hold a conference that may be more substantive than we original thought because of what john harwood just told us. there is some deal perspectively on what the operates would be to pay more tax. 400 or 450. let's bring in a traders view, edging back up towards now 13,000 on the dow. >> and we are. i think everyone is waiting now anxiously for the president to see. ultimately, if they announce this deal, you will get analysts an strategists that will pick it apart to really analyze within what is the deal, what does it mean? and that will dictate it. i was one that thought a band-aid is probably worse than going over. because going over would have provided clarity. you would know exactly what will happen. a band-aid leaves a lot of confusion and potentially more to talk about in the new year as we enter the conversations about
the debt ceiling. so it will continue to add volatility for january. but listen, it is what it is. the mark set responding positively at the moment. so well site wait. >> now 13 thousand for the dow. the market, with the event that we have flou, clearly ahead of us, rally or does it -- is it a deal a deal or a deal that we rally on. >> i think a deal is a deal with the grand bargain. i'm curious to see the deal that comes out. if this program they announce is in fact just a band-aid and leaves confusion, i think the market will digest that, then take money off the table. i would not be surprise if we start on friday afternoon, testing 1384 after the market closed, but absolutely did. and it held and i would not be surprised to see it do that again. especially as we move into january and we have the debt ceiling debate. >> sue, back to you. >> simon, thank you. josh is a writer for the fiscal times and frequent "power lunch"
guest. josh, given what we know about details that john harwood and aimian have been reporting looks like a structure to the deal. what do you think? >> it looks that way and putting a tax rate starting at $450,000 in context, the obama plan was to have the top rate at 36.4% starting at $400,000. it sounds like a major cave-in by democrats but is not nearly as great when you get into the details. >> is it possible to 1e sell it to the house. >> it remains to be seen if house republicans will bite on it. they know they have the leverage with regard to the debt ceiling but the question is, if they can't get plan b through are they willing to do even lower? thus far we vpt seen outside pressure indicating that's possible. >> if you were a betting man though, what do you think this would play out? the president is coming out in less than 15 minutes. >> i think we will see some deal
cobble together before january 3rd. that will reserve a lot of questions on taxes but not on broader questions about spending. leaving a lot of uncertainty to linger from months on end possibly until march. while we should rejoice having a deal we shouldn't necessarily assume that everything is fixed. >> how does this influence debt ceiling talks? >> well, it limits democrats leverage. this is one the big fears. if they don't have taxes as hammer they the have to surrender a lot more on spending. they don't want to give away too much. >> okay. we will see what president says in a few minutes' time here on "power lunch." thanks, josh. >> thank, sue. a special report on fiscal cliff negotiations that is in addition to our coverage all day awning on cnbc and cnbc.com. simon? >> hundred efs thousands of jobs are waiting for congress to act
over the next few hours. who is in trouble? more "power lunch" in two minutes plus of course president obama speaking in about 12. this is cnbc. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade.
the ofds going over the fiscal cliff is the defense sector. the defense sector index today in fact back up near the highs after that report from john harwood that they may be close to a deal when it comes to at least the tax portion of the fiscal cliff. but simon, we still have to deal with the issue in terms of the budget cuts for defense. that would mean 10%. back to you. >> okay, thank you very much. let's remind everybody, we are waiting for president obama to speak at that podium at the white house in about 9 minutes time. our own john harwood adding to the optimism by suggesting they have agreed on levels of 39.6% tax would kick in at 400,000 for a single person, $450,000 for a family. we will wait and see what obama is able to tell us at that news conference in 8 minutes time. the u.s. is now on the edge of the fiscal cliff. hours to go until the deadline and as we get closer in theory,
the pentagon is getting ready to layoff quite literally thousands of employees because of the automatic spending cuts that go into effect if no deal is reached in d.c. at midnight. we have more on that fall out, hunter? >> how you doing simon? ? yes, just to flush out a little bit of what ber that was talking about, is delaying the spending cuts, down to the wire of the fiscal cliff negotiations. it is an absolute must across the potomac river at the pentagon. there would be a $55 million in spending, about 10% cut in many programs while a lot could be delayed, the most immediate contingency is notifying an estimated 800,000 civilian employees about furloughs in the new year. south carolina senator lindsay graham after he was contacted by
secretary of defense leon panetta. >> he says if we do that, it will shoot the defense department in the head and we will have to send out 800,000 layoff notices at the beginning of the year. he is worried to death if we don't fix he is sequester, this will hurt -- >> and there is bipartisan support for not triggering automatic budget cuts, especially defense democrats and white house want a two-year delay, republicans just three months. sue? >> hampton, thank you very much. what impact might a deal or no deal have on the economy ahead? steve liesman has that for us. >> this could be the fiscal cliff game at home report. now that there is a plan in
motion, can you see some of the things that are in play here. the revenue side of the fiscal cliff $520 billion, spending side, $130 billion. some piece of that is going to go away if indeed they do end up capping the increases of those at $400,000, 450 and above. we don't know how much. perhaps the vast bulk of it could go away. no discussion on wlornt automatic spending cuts for this year would be affected at all. there's the total 650. impact of the total fiscal cliff this year and by way of contrast or comparison, here is the gdp effect. we gained in nominal terms and that's why going over the cliff means negative growth, it means a recession. here is some of the detail of what we ever talking about here. 620 billion. that's the total revenue.
depends on which numbers you use. moving on, per capitia effect, it affects different people differently. 26.2 million is the number of americans that will see an increase in taxes subject to amt that alternate taxation system without a patch. listen to whether or not that is part of the fix they are talking about. 2.1 million americans losing extended unemployment benefits. that is part of the deal. a thousand dollars, this is going to happen anyway, we're pretty sure, tax hike from the payroll taxes. unemployment rate up to 9%. that's the estimate for what would happen if we did go over the fiscal cliff. finally 8.2%. that's the total automatic cuts that you get that would include fema, education and state and local aid. obviously states like hawaii, places like virginia that are more dependent on federal spending would get hit harder than other states, sue. so write down the numbers.
write down the percentages and see how much any view they come up with brings it down to figure out what the macro economic effects will be and micro economic effects. simon? >> all right, steve. will do. we are still awaiting president obama to see how things are taking shape on parts of the deal for washington. back in two minutes.
sfls welcome back to prounch. in just a few moments the president will take to the foed poed yum there to talk about the fiscal cliff negotiations. john, you have outlined what we believe are some of the components of this possible deal. given what you know, which side gave more at this point? >> i think everybody is giving. look, the president wanted, and democrats wanted, having campaigned on it, $250,000 threshold for family income for the return to the clinton jer gentleman tafrm rates of 39.6. republicans didn't want tax increases on anybody. democrats wanted more on estate tax. they are getting it. not as much as the president proposed in his budget. so the magic of these deals is that everybody can describe something as victory. and if we get it, if democrats ultimately can come to an accord
with republicans on the length of the deferral of the automatic across the board cuts, that's the final key. and somebody's going to have to give on that. democrats are holding firm because they think they've given more. >> john, can you reiterate for us, please, the details of the deal as your reporting has indicated. >> on the biggest piece, the middle class tax cuts, there is a tentative agreement to raise the top rate on taxes to 39.6, clinton era rates for individuals who make over $400,000 and couples who make over $450,000. that's the threshold. also above the threshold, cap gains and dividends from 20% to 15. those are the basics on middle class taxes. on estate tax, from 35 to 40%. the question is going to be, can they solve the sequester problem and sell it to members in both
parties? get it through senate on bipartisan vote? in effect force john boehner to put it on the floor in which parties tell me it would pass. >> that is then the critical issue, is it not? we heard earlier on with the deputy for dop in the house is a must. details are in private and no one was talking to them. would the deal get passed in the house? >> i think it could. we have been talking to republicans who say they think a deal from the senate will pass in the house but pass with democratic and republican votes. he think speaker boehner will put it on the floor and folks are telling me that but that said, you never know until you know and that's why they have the whip operations. they are counting nos very carefully to find out how many liberal democrats and republicans they can lose on either side to have coalition votes in the middle.
that's the real trick. some have been optimistic that this deal will pass and you know, as long as it is within the contours that people are expecting at there point. >> okay. reminder for those of you just tuning in. we are waiting for a live press conference by president obama as we begin to get details of the deal that may have been done on capitol hill. we will squeeze? a quick commercial break. we'll be bab in two. [ male announcer ] how can power consumption in china,
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this is a live television feed from inside the white house. we are told the president will address the country shortly on the fiscal cliff. as we await what will be presumably a market address, let's start shuffling through where we are in a moment. we kick off with mary thompson on the floor of the new york stock exchange. mary? >> john harwood has been reporting throughout the morning and gifting lift throughout the day, the dow off 54 points and we are seeing gains in material stocks and also tech stocks getting a nice bid into today's session. you can see the gyrations in the broader market reflecting different headlines we've seen
coming out of washington throughout the morning. taking a look at the chart of the s&p, i'm just pulling that up for a couple of reasons. we are heading into the month that the s&p is down for the month of december and down for the quarter. when the s&p is down for the quarter, typically 70% of the time that doesn't bode well for the first quarter of the next year. we are talking about stocks bertha has been talking about. the expectations is there are some delays to automatic spending cuts that would have a big impact on the defense industry. so they are higher in today's session. of course banks also have been responding quite closely to any news out of washington pch right now approaching the highs of the new day. again on expectations of, i guess you could call this, a mini deal, simon. to get us through the next couple of months until we get to the automatic spending cuts. >> mary, thank you.
gold heading for its 12th straight year of gains. jackie over to you. >> good afternoon, simon. gold having a $20 a day higher. not a coincidence that we heard about president obama's press conference at the same time. gold, as you said, on track for its 12th straight gain this year. a year to date gain of 6%. but interesting to point out that it is underperformed s&p 45u7b this year for the first time since 2004. moving on to silver, also up in the session, around $30. up more than 3% for the year. also want to look at copper getting a little bit after bid today on some recent housing data we've had out of the u.s. but strong data out of china on manufacturing. we have a 5% gain year to date in copper. copper higher but logging losses for the year. platinum losing more than 10%. simon, back to you.
>> thank you, jackie. behind the headlines we are doing very well at nasdaq. out performance there own likes of apple seema mody, up 3.5%. >> absolutely. apple shares definitely helping nasdaq given the fluidity of the situation in washington, simon, hard to predict where the markets will end on the day. right now seeing session highs of 1.2%. as you mentioned, apple shares providing a nice lift to the nasdaq. recent note from topeka capital, an insatiable appetite in hong kong and china for the ipad mini. some of the bullish commentary notes. facebook shares also up 2.6%. upgrading the stock from sell to buy, writing that facebook has ad spending from large brands. interestingly enough, look the at as in dab 100 just for q4, facebook made that list. other stocks on the list include yahoo! virgin media and green
mountain coffee. sue, back over to you. >> thank you, seema. we are waiting for president obama to come to the podium and perhaps detail some of the mini deal that apparently is being worked out in washington. as we wait for more details of what has been worked out, we want to talk a bit about the role that america's ceos played in the fiscal dpe bait calling for action. once again, eric is editor and chief of ink magazine. good to see you. >> good to be here. >> it t was quite extraordinary, the number of ceos that came together and put an awful lot of pressure on washington it get a deal done. >> think they emphasized that compromise would include spending cuts and tax hikes. i think that may have allowed a compromise to happen. it may have allowed some people who are hard-liners to have an excuse. give them cover. >> i was going to say, basically
a number of ceos gave them political cover so they today make decisions and sell it to their constituents. i think one of the things the ceo mass gotten wrong though is inflatd the fiscal cliff to a debt crisis. yes, we have a problem and yes we have to fix it with tax hikes and spending cuts. but not by tomorrow. what we have to do by tomorrow is avoid the imposition of a draconian sweep of austerity that will send the economy into recession. >> do you anticipate as we get nearer to debt limit talks that ceos will once again make an appearance with the type of kwors they did to avoid the fiscal cliff or not? >> i hope so, sue. >> and more contentious. >> right. that too is not really about america's long-term debt problem. it is about avoiding an immediate self inflicted
economic wound. and it'll chute shut down the government. it would be more draconian than what we are facing with the fiscal cliff. >> i was struck by not only the number of ceos that put pressure on washington, but ceos from some of the biggest companies in america to the small e69 companies in america. >> they were all in favor as a compromise, a tax hike as part after long-term debt solution. that's what has to happen. we have two minutes before the president comes out. let me turn you to the top of the list, mark zuckerberg, why? eric, excuse me one second. we will go to ayman an john.
we have some of the framework but the language here may be extremely important. what are we listening for? >> what i expect from the president is to try to keep the pressure on negotiators to get a deal. he will have middle class families around him. to some degree this is a pr event. it is possible and the republican aide i mentioned earlier who confirmed details on the agreement of middle class taxes said the president may mention that agreement in his appearance to try to celebrate it. i have to say that democratic aides, because they are resisting where republicans are on the automatic across the board spending cuts, the sequester, are pushing back and saying nothing is agreed to until everything is agreed to. we do not have a deal yet. i referred to the interplay among various factors. you tweet a threshold or tax rate and if you don't get what you want on something else, you
may tweak it more. that's some of the give and take. it is a positive sign there a tentative deal on the middle class tax cut part but we don't have a final agreement yet. this is why it is very unlikely the president will announce a deal unless something happened in the last five or ten minutes that we haven't caught up with but we do expect that the agreement on middle class tax portion is something that president can regard as reasonably his. remember the $400,000 -- excuse me? >> we are just watching the president move into the white house. we anticipate he will be at the podium shortly, john. go ahead and finish your sentence. >> the president's last offer to john boehner in the negotiations before they broke down was for a $400,000 threshold. that's $400,000 flesh hold for couples, though it wasn't defined all this well. now by saying the threshold is
400,000 for individuals, the president can say i got my last offer, higher threshold for married couples and that's why he can claim this for his side. >> jorge posad>> john. >> yes. >> did harry looreid yesterday m to be playing hard ball? >> no, we still have to cross with with the floor votes. if will elements of the deal gel. >> well interrupt you as the president greets some of the people behind him. he should be at the podium shortly. it is the whoutses a turn, middle class americans who would be affected of course bit fiscal cliff as would nl upper income americans as well. let's listen to the president. >> thank you. please, everybody have a seat. good afternoon, everybody.
welcome to the white house. >> thank you for having us. >> i realize that the last thing you want it hear own new year's eve, is another speech from me. but i do need to talk about the progress that's being made in congress today. for the last few days, leaders in both parties have been working toward an agreement that will prevent a middle class tax hike from hitting 98% of all-americans starting tomorrow. preventing that tax hike has been my top priority. because the last thing folks like the folks up here on the stage can afford right now is to pay an extra $2,000 in taxes next year. middle class families can't afford it. businesses can't afford it. our economy can't afford it. now today it appears an
agreement to prevent this new year's tax hike is within sight. but it is not done. there are still issues left to resolve. but we're hopeful that congress can get it done. but it's not done. and so, part of the reason that i wanted to speak to all of you here today is to make sure that we emphasize to congress and that members of both parties understand that all across america, this is a pressing concern on people's minds. now, the potential agreement that's being talked about would not only make sure the taxes don't go up on middle class families, it also would extend tax credits for families with children. it would extend our tuition tax credit that helped millions of families pay for college. it would extend tax credits for
clean energy companies creating jobs and reducing dependence on foreign oil and extend unem ploim insurance to 2 million americans out there still actively looking for a job. i have to say that ever since i took office throughout the campaign, and over the last couple of months, my preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a a grand bargain, whatever you want to call it, that solves our deficit problems in a balanced and responsible way. it doesn't just deal with taxes but deals with spending in a balanced way so that we can put all this behind us and just focus on growing our economy. but with this congress, that was a little too much to hope for at this time. pl maybe we can do it in stages. we will solve this problem instead in several steps.
last year in 2011 we started reducing the deficit through $1 trillion in spending cuts. those have already taken place. the agreement being worked on right now would further reduce the deficit by asking the wealthiest 2% of americans to pay higher taxes for the first time in two decades. that would add additional hundreds of billions to deficit reduction. that's progress. but we will need to do more. keep in mind that just last month republicans said they would not raise 2568 taxes on wealthiest americans. now rates will be raised permanently. keep in mind we will still have more work to do. we still have deficits that have to be dealt with. we still have to think about how we put our economy on a
long-term projectry of growth, how we put money into education, infrastructure that help our economy grow. and keep in mind that threat of tax hikes going up is only pun part of the so-called fiscal cliff that everybody has been talking about. >> what we also have facing us starting tomorrow are automatic spending cuts that are scheduled to go into effect. and keep in mind that some of the spending cuts that congress has said will automatically go into effect, have an impact on our defense department, but also impact things like head start. so there are programs scheduled to be cut that we're using an axe instead of a scalpel. may not always be the smartest cuts. so that is a piece of business that still has to be taken care
of. i want it make clear that dealing with the automatic spending cuts threatened for next month, they also have to be balanced. remember my principle is, let's do things in a balanced responsible way and revenue has to be part of the equation in turning offer the sequester and eliminate automatic spending cuts as well as spending cuts. the same is true for any future deficit agreement. obviously, we're going to have to do more to reduce our debt and deficit. i'm willing to do more but it has to be balanced. we have to do it in a balanced responsible way. for example, i'm willing to reduce our medicare bills by finding ways to reduce the cost of healthcare in this country. that's something we should all agree on. wasn't to make sure that medicare is there for future generations. but kufrcurrent trajectory is s
high that we have to make sure it is sustainable. that kind of reform has to go hand in hand with doing more work to reform our tax code. so that wealthy individuals, biggest corporations can't take advantage of loop holes and deductions that aren't available to most of the folks standing up here. aren't available to most americans p there is still more work to be done in the tax code to make it fair even as we are also looking at how we can strengthen something like medicare. now, if republicans think that i will finish the job of deficit reduction through spending cuts alone and you hear that sometimes coming from it, that after today, we are just going to try to shove only spending cuts down -- well, shove spending -- shove spending cuts at us, that will hurt seniors,
or hurt student, or hurt middle class families, without asking also equivalent sacrifice from m millionaires or can companies with a lot of lobbyists et cetera. if they think that is the formula for how we solve this thing, then they've got another thing coming, that's not how it will work. we have to do this in a balanced and responsible way. if we are serious there debt reduction, then it has to be a matter of shared sacrifice. at least as long as i'm president and i'm going to be president for the next four years, i hope. [ cheers and applause ] so anyway, for now, for now our most immediate priority is to stop taxes going up for middle class families. starting tomorrow. i think that is a modest goal that we can accomplish.
democrats and republicans and congress have to get there done. but they're not there yet. we are close, but not there yet. one thing we can can count on with respect to this congress, and that is that if there is even one second left before you do what you are supposed to do, they will use that last second. so at this point it looks like i will be spending newier's here in d.c. y'all will be hanging out in d.c. too. i can come to your house? is that what you said? i don't want to spoil the party. but the people who are with me here today, the people who are watching at home, they need our leaders in congress to succeed.
they need us to all stfocused o them. not on politics. not on special interests. they need us to focus on families, students, grandmas. folks out there work really, really hard and are just looking for share shot and reward for the hard work. they expect our leaders to succeed on their behalf. so do i. so keep the pressure on over the next 12 hours or so and let's see if we can get this thing done. i thank you all. if i don't see you or show up at your house, i want to wish everyone a happy new year. thank you very much. >> so the president of the united states concludes a news conference setting the dow soaring at one point up 74 points when he said that politicians were close to only then to fall back when he said they had not done it yet. it like northern trust by your side
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>> where it left us simon, as in answer to your question before, who is his audience. there were remarks about only 600 million in revenue that thresholds are high. tom harkin went on the senate floor earlier. we will ask for more revenue. remember this $600 billion is less than john boehner's last revenue offer. they are going for more at la later point. >> how is that going to play on the hill. >> it'll play well with democrats and not so well with republicans. the president said these tax increases will be permanent. the president is signalling there that whatever is in this agreement cooked up behind closed doors does include a permanent extension of tax decreases for the middle class. that's an important part of the news as well. >> it was